Certified Pre-Owned

Q&A with Ron Cooney of Toyota Certified Used Vehicles

CARY, N.C. - 

As part of the Aug. 1 print edition of Auto Remarketing, our Power 300 issue, we conducted a few Q&As with leaders from some of the top companies in the used-car space. 

Below is a Q&A with Ron Cooney, who is the Toyota Certified Used Vehicles sales operations manager at Toyota Motors North America.

Auto Remarketing: When did you move into the role of TCUV sales operations manager, and what have been some of your goals from the outset?

Ron Cooney: Great timing on my move into this position. In 1997 I started with Toyota as a TCUV consultant for the New York and Boston regions. Now, May 2017, exactly 20 years and several positions later, I’m at headquarters working with all of the Toyota regions. My short-term goal is to get settled in Plano, Texas, and adjust to the heat. Seriously, the short-term goal is to serve all of our regional offices in their efforts in supporting the dealers.

AR: How has the increase in off-lease volume helped Toyota certified, and how has it challenged Toyota certified?

RC: Some may look at a lot of lease returns as a problem. Lease returns obviously present new-car sales opportunities as well as create the used-car and TCUV inventory pipeline. Accurate lease return schedules help design incentives and marketing based on expected dealer inventory levels. Lower-mileage, shorter-term lease returns provide great inventory opportunities for both TCUV and non-certified sales. The point is, the Toyota dealer has first crack at the inventory and then the Toyota dealer becomes the one-stop place for any used, certified or new Toyota.

AR: How is the TCUV working to raise awareness and understanding of CPO among consumers?

RC: These days, terms like “peace-of-mind,” “consumer confidence,” etc., have become clichés when it comes to certified used vehicles, or certified anything for that matter. We are delivering the message every day that TCUV is more than just a warranty, and peace-of-mind is not a cliché. TCUV means a thorough eligibility inspection, intense reconditioning, both mechanical and cosmetic. So there’s confidence at the time of purchase, which is just as important as the warranty benefit in the event there’s an issue down the road. You start with the best new cars, add in the best reconditioning standards and you get the best of the best used cars, a Toyota Certified Used Vehicle.

AR: What are some of the challenges dealers are facing in CPO, and how is Toyota working to help dealers overcome those challenges?

RC: Challenges in the used-vehicle and CPO markets can be cyclical. Too many available cars can drive prices down, too few cars drive prices up and less selection for consumers. Consumer questions like, “Should I buy a new car or should I buy a used car?” always challenge dealers to make sure they have the right vehicle, priced correctly for every consumer.

Toyota has seen tremendous growth in used Toyota and TCUV sales over the years. When dealers stay focused on having the right car for everyone, Toyota, the dealer and, most importantly, the consumer, wins. If we do that correctly, we have a customer for life.

Kia reports best-ever half & quarter for CPO sales

CARY, N.C. - 

It was a record half and a record quarter for Kia certified pre-owned

Moving just under 40,000 units, Kia Motors America said the first half of the year represented its best six months ever for CPO sales. More specifically, Kia sold 39,799 certified vehicles in the first six months of 2017, beating year-ago figures by 7.8 percent, according to Autodata Corp.

While June sales were down 13.8 percent at 6,385 units (per Autodata statistics), Kia said the 20,346 CPO vehicles it sold from April through June marked its best quarter ever for certified.

The company said the second-quarter was driven by double-digit-percentage gains for its Cadenza, K900, Sportage and Sedona models.

“Kia is enjoying a terrific year for Certified Pre-owned vehicle sales. Kia has gained market share and is outperforming some of its big-name competitors,” Autotrader executive analyst Michelle Krebs said in the Kia news release.

“As its off-lease vehicles return to the market, Kia is in a strong position to maintain its momentum,” Krebs said. 

Industry-wide CPO sales were down a bit year-over-year in June, but year-to-date sales still beat the first-half totals from a record 2016.

According to Autodata, there were 221,853 CPO sales last month, which was down 0.8 percent from June 2016.

Through six months, there have been 1.34 million certified sales, up 1.2 percent from last year’s pace.

Autotrader names top summer CPO deals

ATLANTA - 

With consumers taking advantage of both pleasing gas prices and the time to shop around this summer, Autotrader has come out with its top picks for certified pre-owned deals in July, which include promotions by eight different automakers.

"For shoppers that are looking for great value in their next car, but are concerned about the potential repair bills that could crop up with a used car, a certified pre-owned model is a good option," Autotrader executive editor Brian Moody said in a news release.

Autotrader editors' top picks for certified pre-owned deals for July include:

—Audi is currently offering 2.49 percent interest on all 2012 to 2016 CPO models for up to 66 months. The offer excludes the exotic R8 sports car.

—Through the end of August, qualified Cadillac shoppers can get 2.9 percent interest for up to 36 months on any CPO 2015 SRX model or newer.

—Kia's certified pre-owned program offers qualified shoppers 1.9 percent interest for up to 36 months on all CPO Kia models.

—In addition to two desirable warranties, Mazda’s CPO program currently touts 1.49 percent interest for up to 36 months on all CPO models through the end of September.

— Mercedes-Benz's CPO program is offering 1.99 percent interest on all CPO 2014-2016 CLA models for up to 36 months.

— This month, MINI qualified shoppers can get 0.9 percent interest on any 2013 or 2014 CPO model. And for shoppers paying cash, MINI is offering an additional $500 cash back incentive this month.

— At Toyota, shoppers interested in the Camry Hybrid can get 1.9 percent interest for up to 60 months through the end of October

— Volvo’s CPO program currently offers seven years or 100,000 miles of comprehensive coverage from the original sale date and a special incentive on its 2015 S60 sedan. CPO shoppers who purchase a 2015 S60 can get 0 percent interest for up to 24 months.

Click here to get additional details for these CPO programs.

CPO car sales up 1.2% in first half of year

CARY, N.C. - 

Certified pre-owned vehicle sales were down a bit year-over-year in June, but year-to-date sales still beat the first-half totals from a record 2016.

According to Autodata Corp., there were 221,853 CPO sales last month, which was down 0.8 percent from June 2016.

Through six months, there have been 1.34 million certified sales, up 1.2 percent from last year’s pace.

June was the best CPO month ever for four brands (Cadillac, FIAT, Maserati and Mitsubishi), Autodata said.

Cadillac moved 4,236 certified units last month (up 56.7 percent), FIAT sold 112 CPO units (up 138.3 percent), Maserati had 92 CPO sales (up 95.7 percent) and Mitsubishi moved 239 CPO cars (up 177.9 percent).

Domestic brands sold a combined 79,249 certified vehicles for the month (up 2.5 percent), with year-to-date sales down 2.2 percent at 462,937.

Asian brands were down 3.6 percent in June with 106,374 CPO sales, but year-to-date sales are up 2.5 percent at 653,229 units.

European brands were up 0.5 percent in June (36,230 CPO sales) and 5.1 percent for the first half of the year (225,439 units). 

Kia adds second straight J.D. Power initial quality honor as CPO sales soar

COSTA MESA and IRVINE, Calif. - 

Kia Motors America leadership understood that the automaker surprised the industry last year when it topped the J.D. Power U.S. Initial Quality Study (IQS).

As the 2017 study showed new-vehicle quality is at its highest level ever — improving 8 percent from a year ago — Kia celebrated again on Wednesday by taking the title as being ranked highest in overall initial quality for a second consecutive year.

This J.D. Power accolade arrives as Kia said last week it now has gone 16 straight months of certified pre-owned sales records.

Kia moved 7,008 CPO units last month, which beat year-ago figures by 10.2 percent and was its best May ever, according to Autodata Corp. Through five months of the year, there have been 33,414 Kia certified sales, good for a 13.2-percent increase.

And perhaps Kia can leverage this J.D. Power honor into even more CPO turns.

“When Kia beat out the entire industry in last year’s J.D. Power Initial Quality Study many people wondered if we could maintain such a lofty position. Today, the answer is loud and clear as Kia owns the top spot for the second straight year with more 2017 segment award winners than any other nameplate,” said Michael Sprague, Kia’s chief operating officer and executive vice president.

“Our back-to-back chart-topping IQS performances reconfirm Kia’s status as today’s world-class automaker and reflect the exacting standards and craftsmanship our team members instill into every car, crossover and SUV Kia builds.”

Initial quality in this J.D. Power study is measured by the number of problems experienced per 100 vehicles (PP100) during the first 90 days of ownership, with a lower score reflecting higher quality. In this year's study, quality improves across seven of the eight categories measured, with 27 of the 33 brands in the study improving their quality compared with 2016.

“Automotive manufacturers are responding to consumer feedback and producing vehicles of the highest quality,” said Dave Sargent, vice president, global automotive at J.D. Power. “The industry has improved significantly in each of the past three years. Today's vehicles have more things that could go wrong but fewer things that actually do go wrong."

J.D. Power noted that Kia led the way with a score of 72 PP100. Kia collected five segment awards — the most of any nameplate — for the Soul (compact multi-purpose vehicle), Forte (compact car), Cadenza (large car), Niro (small SUV) and Sorento (midsize SUV).

J.D. Power officials indicated Genesis (77 PP100) ranked second overall followed by Porsche (78 PP100). Ford and Ram (86 PP100) tie for fourth.

Mini is the most improved brand, with owners reporting 33 PP100 fewer problems than in 2016. Other brands with strong improvement include Ram (28 PP100 improvement), Acura (19), Volvo (18) and Ford (16).

General Motors models that ranked highest in its segments were the Chevrolet Silverado; Chevrolet Silverado HD; Chevrolet Sonic; and GMC Terrain.

BMW models that rank highest in their segments are the BMW 2 Series; BMW 4 Series; BMW X6; and Mini Cooper.

Other models that rank highest in their respective segments are the Chrysler Pacifica; Ford Expedition; Ford Mustang; Infiniti QX80; Lexus GS; Mercedes-Benz GLA; Nissan Frontier; Porsche 911; Porsche Macan; and Toyota Camry.

Three other major findings

J.D. Power mentioned a trio of other key findings from the 2017 study, including:

—Technology improving but still problematic: Audio/communication/entertainment/navigation (ACEN) remains the area where new-vehicle owners experience the most problems. However, this category showed the most improvement since 2016 with a score of 22.8 PP100, or 2.7 PP100 better than last year.

—Early warning bells for autonomous technology: The only category to worsen this year is features, controls and displays. The largest increases in problems are for cruise control (primarily adaptive cruise); lane departure warning; collision avoidance/alert systems; and blind spot warning. These features comprise some of the building blocks of autonomous vehicles, and an increasing number of consumer-reported problems sounds warning bells for automakers and suppliers. Consumers will need to be convinced that these systems are foolproof before they will give up driving control to autonomous vehicles.

—Domestic brands continue to show improvement: The "Detroit Three" outperform import brands for the second year in a row but for only the third time since the study was first published in 1987. In 2017, domestic brands receive a score of 93 PP100 compared with 99 PP100 for import brands. Last year, domestic brands also had fewer problems (103 PP100) compared with import brands (106 PP100).

“The Initial Quality Study continues to demonstrate the critical importance of automakers responding to consumer feedback regarding vehicle quality,” Sargent said.

“Any automaker that stands still will quickly start to fall behind. For consumers, the great news is that significant improvements are occurring in all model segments, meaning that you don't have to spend a lot of money to get a quality vehicle,” he continued.

Plant awards & other study notes

J.D. Power highlighted Toyota Motor Corp.’s Kyushu 2 plant in Japan, which produces the Lexus ES and Lexus RX, received the Platinum Plant Quality Award for producing models with the fewest defects or malfunctions.

Plant quality awards are based solely on defects and malfunctions, and exclude design-related problems.

GM’s Fort Wayne, Ind., plant, which produces the Chevrolet Silverado and GMC Sierra, receives the Gold Plant Quality Award for the Americas region, while Porsche's Leipzig plant, which produces the Porsche Cayenne and Macan, receives the Gold Plant Quality Award for the Europe/Africa region.

Four other items worth mentioning:

—In 1987, when the IQS was first published, Mercedes-Benz ranked highest as a nameplate while the Toyota Cressida was the highest-ranked model.

—Domestic brands have scored better than imports in only three years (2010, 2016 and 2017).

—Mass market brands have scored better than premium brands in only three years (2006, 2016 and 2017).

—There have been four generations of the study (IQS1: 1987-1997; IQS2: 1998-2005; IQS3: 2006-2012; IQS4: 2013-present). The industry has shown significant improvement in each iteration, with the best IQS scores occurring in the most recent year for each generation.

The U.S. Initial Quality Study is based on responses from nearly 80,000 purchasers and lessees of new 2017 model-year vehicles who were surveyed after 90 days of ownership. The study is based on a 233-question battery organized into eight problem categories designed to provide manufacturers with information to facilitate the identification of problems and drive product improvement.

The study was fielded from February through May.

The complete 2017 study can be found here.

Honda revamps CPO website to showcase inventory

TORRANCE, Calif. - 

Honda’s certified pre-owned vehicle website (HondaCertified.com) has been completely redesigned to provide a more focused shopping experience, the company said Monday.

The automaker has implemented a vehicle compare feature, a vehicle recommendations tool and an interactive payment calculator to help car shoppers find vehicles within their budget.

On the new site, the primary focal point for shoppers is inventory. The automaker has included a new inventory alert feature that can provide the most up-to-date vehicle availability information. 

Key features of the revamped Honda CPO site include the following:

  • Inventory Alerts: Once a shopper creates an alert, Honda will notify that customer when the vehicle they’re looking for is available
  • Similar Vehicle Comparison: Visitors can view and compare suggestions for other Honda CPOs they may be interested in
  • Favorite Vehicle Shareability: Users can share the vehicles they're considering with friends and family
  • Vehicle Comparability: Shoppers can compare different Honda models
  • Device-Agnostic Design: New website design provides a seamless user experience across all platforms

"Driven by a great deal of research and customer feedback, Honda's new destination for certified pre-owned vehicles brings inventory front and center," said Dan Rodriguez, manager of auto remarketing and certified pre-owned at American Honda. "With the booming growth in our certified pre-owned sales, we've engineered our new Honda site to make comparisons simple, while providing an online shopping experience that makes finding a vehicle fun and easy."

Honda’s CPOs have experienced 6.8-percent sales growth this year, "outpacing the performance of the non-luxury certified pre-owned auto market,” the automaker added.

Kia notches another CPO record

IRVINE, Calif. - 

Kia Motors America has now gone 16 straight months of certified pre-owned sales records, the company said Wednesday.

Kia moved 7,008 CPO units last month, which beat year-ago figures by 10.2 percent and was its best May ever, according to Autodata Corp. 

Through five months of the year, there have been 33,414 Kia certified sales, good for a 13.2-percent increase.

“Certified pre-owned programs offer new-car like peace of mind to a wider spectrum of vehicle shoppers,” Karl Brauer — who is executive publisher of Autotrader, Dealer.com and Kelley Blue Book — said in a news release.

“While nearly every manufacturer has increased its CPO coverage in recent years, Kia’s program is clearly resonating with buyers who recognize the brand’s superb value equation,” he said.

Kia sold 76,224 certified vehicles in 2016, its best-ever sum, according to Autodata.

Maria Williams, Kia's senior CPO retail support manager, said earlier this year that Kia's certified sales have climbed each year since the program was launched in 2008, and the program is targeting another growth year in 2017.

As for May, the Kia models generating the most CPO sales were the Optima and (1,657) and Sorento (1,486), according to the automaker. 

CPO sessions at NIADA Convention

LAS VEGAS  - 

In addition to sessions on financing, regulatory moves, industry disruption and more, the NIADA Convention & Expo this week will include a host of certified pre-owned-related sessions.

The event, which began Monday and runs through Thursday, is being held at The Mirage in Las Vegas.

Among the CPO sessions are:

  • "Winning the CPO Retail Battle vs. OEM Programs," featuring Joe Schumacher of CARFAX and Bill Carr of Warrantech (4:15 p.m. PT breakout session on Tuesday).
     
  • "Success Tips of Independent Dealer CPO Pros." Panel moderated by Natalie Suarez of Warrantech; featuring panelists Frank Fuzy of Century Motors of South Florida, Todd Hoagey of Auction Direct USA, Billy Threadgill of Van’s Auto Sales and James Santistaven of Zia Motors. (9:45 a.m. breakout session on Wednesday)
     
  • "State of the CPO Market Today and Tomorrow," with Tyson Jominy of J.D. Power (3:15 p.m. breakout session Wednesday.)
     
  • "Millennials and Their Digital Tools: The Next Big CPO Market," featuring Marcus Dame of Cox Automotive and Roy Daves of eBay Motors (4:15 p.m. breakout session on Wednesday).

For a complete agenda, visit www.niadaconvention.com.

And be sure to catch members of the Used Car Week and Auto Remarketing team this week at booth #1825

 

 

Autotrader names top CPO deals for June

ATLANTA - 

This month, automakers' certified pre-owned programs carry a number of attractive and competitive deals, including some Autotrader says are traditionally offered solely to new car buyers.

"If you're shopping on a budget, there are some great deals to be had among the many certified pre-owned offerings this month," Autotrader executive editor Brian Moody said in a news release. "When purchasing a CPO vehicle that has passed a strict inspection by the original manufacturer, you've made a smart decision on a vehicle with many trouble-free miles ahead."

Autotrader Editors' Top Picks for Certified Pre-Owned Deals for June

— Acura's certified pre-owned program touts excellent coverage this month, according to Autotrader. The brand offers 7 years or 100,000 miles of powertrain protection from the car's original sale date and an added year of comprehensive coverage. Also in June, qualified shoppers can get a certified pre-owned TLX, ILX or TL sedan with 1.49 percent interest for up to 36 months.

— Buick's certified pre-owned program offers both a "strong" incentive and a good deal typically only applied to new vehicles through the end of the month, the third-party car shopping site said. Qualified shoppers can get 1.9 percent interest for up to 36 months on any certified pre-owned Buick Enclave, Encore or LaCrosse — a good deal that typically only applies to new vehicles.

— This month, Chevrolet's certified pre-owned is offering qualified buyers interested in financing 1.9 percent interest for up to 36 months on any certified pre-owned Cruze, Equinox, Malibu, Silverado or Traverse models.

— Ford's certified pre-owned program offers qualified shoppers 1.9 percent interest for up to 66 months on certified pre-owned models of the Fusion midsize sedan, Escape compact crossover and Focus compact car through the end of the month. "That's a good rate over an unusually long period, especially for a used model," Autotrader said.

— Infiniti's certified pre-owned program offers coverage for up to 6 years on a number of models. The automaker is also offering one of the best CPO incentives currently available, according to Autotrader: Qualified shoppers can get 0.99 percent interest for up to 36 months on all certified pre-owned Infiniti models.

— Kia's certified pre-owned program is a favorite of Autotrader this month. In June, the automaker offers powertrain protection for up to 10 years or 100,000 and 1.9 percent interest for up to 36 months to qualified buyers on all certified pre-owned Kia models. "That's a great deal — and one you'd typically expect to only find on a new car," the car shopping site said.

— Subaru’s certified pre-owned program has introduced two notable benefits this month — no deductible, and full transferability to future owners. Also this month, the automaker is offering qualified buyers 1.49 percent interest for up to 36 months on all certified pre-owned models.

— Through the end of the month, Toyota's certified pre-owned program offers up to 7 years of powertrain protection from the original sale date, as well as an added year of bumper-to-bumper coverage. Qualified shoppers interested in a CPO RAV4 can get up to 1.9 percent interest for up to 60 months. This is a better deal than most other Toyota models, Autotrader said.

For additional information about the CPO programs named, visit http://www.autotrader.com/car-deals/cpo-deals-june-2017-266390.

Why alternative powertrains might be tough to turn

McLEAN, Va. - 

If you have certified pre-owned units with alternative powertrains, the spring issue of Perspective from J.D. Power Valuation Services (formerly NADA Used Car Guide) offered some insight into why it might be difficult to turn that vehicle.

Before it became that CPO model, J.D. Power analysts explained that alternative segments generally have weaker demand and higher incentives than their gasoline-powered counterparts on the new side of the market.

“These two hindrances carry over directly to the used market, which means prices of used alternative powertrain models fall at much higher rates than for their gasoline counterparts,” analysts said in the report.

“The higher rate of depreciation means electric vehicles, plug-in hybrid and traditional hybrid retained value is frequently inferior to competitive gas models,” they continued.

Looking at the most recent 3-year-old retention figures by powertrain type (3-month average from March to May of this year), analysts noticed gasoline equipped models have retained at a rate of 52.1 percent, followed by hybrids at 46.4 percent.

Trailing much further behind, J.D. Power found that plugin hybrid and electric vehicle value retention reached 36.9 percent and 26.9 percent, respectively.

“Looking back, 2016 and 2015 retention results for the same period were similar. However, electric vehicle retention was more volatile because of new models being added,” analysts said in the report, which can be downloaded here.

Impact of fuel prices

J.D. Power also mentioned that what consumers are paying at the pump isn’t giving them much of an incentive to take that CPO unit off your store’s hands.

Analysis cited the forecast from the U.S. Energy Information Administration (EIA) that predicted fuel prices are expected to grow from roughly $2.30 per gallon in February to $2.51 per gallon in July before falling to $2.24 per gallon by December. Looking further out, the EIA expects prices to average $2.40 per gallon in 2018 and $2.44 per gallon in 2018.

“With average regular grade gas prices expected to remain around or under $2.50 per gallon in the U.S. over the short-term, there is little reason to believe that buyers who are sensitive to high gasoline expenses will be inclined to choose an alternative powertrain vehicle over a traditional gas-powered automobile due to the cost of fuel,” J.D. Power said in the report.

“However, it’s entirely possible that even with low gas prices expected in the coming years, some environmentally conscious consumers will continue to actively purchase electrics or plug-in hybrids,” analysts added.

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